Problem 3-11 High-Low Method; Cost of Goods Manufactured [LO2] Sarnia Ltd. is a manufacturing company thatproduces a single product. The company keeps meticulous records of manufacturing activities from which the followinginformation has been extracted: March-Low June-High Number of units produced 6,030 9, 045 Cost of goodsmanufactured $ 173,040 $ 267, 500 Work in process inventory, beginning $ 11,700 $ 41,600 Work in process inventory,ending $ 19,500 $ 27,300 Direct materials cost per unit $ 6 6 Direct labour cost per unit $ 10 10 Manufacturingoverhead cost, total? ? The company's manufacturing overhead cost consists of both variable and fixed cost elements.To have data available for planning, management wants to determine how much of the overhead cost varies with thenumber of units produced versus how much is fixed per month. Required: 1. For both March and June, estimate theamount of manufacturing overhead cost added to production. 2. Using the high-low method, estimate a cost formulafor manufacturing overhead. 3. If 7,030 units are produced during a month, what would be the cost of goodsmanufactured? Assume that work in process inventories do not change.

High-low Method:> High-low method is used to determine the fixed cost and variable cost for…

number of units produced versus how much is fixed per month. Required: 1. For both March and June, estimate the amount of manufacturing overhead cost added to production. 2. Using the high-low method, estimate a cost formula for manufacturing overhead. 3. If 7,030 units are produced during a month, what would be the cost of goods manufactured? Assume that work in process inventories do not change.

number of units produced versus how much is fixed per month. Required: 1. For both March and June, estimate the amount of manufacturing overhead cost added to production. 2. Using the high-low method, estimate a cost formula for manufacturing overhead. 3. If 7,030 units are produced during a month, what would be the cost of goods manufactured? Assume that work in process inventories do not change.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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